Void Agreements – Agreements expressly declared as void – Section 26 to 30
Under section 10 of the Indian contract act, one of the requirements of a valid contract is that the agreement should not be expressly declared to be void. S.s 26 to 30 of the act declare the following agreements to be void.
AGREEMENTS IN THE RESTRAINT OF MARRIAGE: (Section 26)
As per Section 26, every agreement in restraint of marriage of any person other than minor is void. Contract in restraint of marriage or those which interfere with freedom of choice in marriage is void. A person is not bound by law to get married, but an agreement where a person is bound not to marry or where his freedom of choice is interfered with is contrary to public policy and therefore is declared as void.
LOWEE vs PEERS
Mr. X promised under seal (no consideration would be necessary) not to marry any person besides Catherine Lowee; and if he marries he has paid the sum of 2,000 pounds. The court upheld that such an agreement is void as it purely is restrictive and against public policy.
AGREEMENT IN RESTRAINT OF TRADE (Section 27)
A person may carry on any lawful professional trade or business as per their choice. Any agreement preventing him from doing so in order to avoid the competition or to maintain a monopoly. Such an agreement will be void
- Lowe Vs. Peers
- Madhub Chander Vs. Rajcoomar Dass
Exceptions :
-
Sale of goodwill :
when there is a sale of the business by a person along with the goodwill the seller may make an agreement with the buyer that the seller will not carry out the business of similar nature to that of the buyer. Such an agreement is valid. The exception under the Indian partnership act :
- All the existing partners can make a contract that partners shall not carry any business other than that firm of which he is a partner
- Another exception is that an agreement may be made between the outgoing partners and the remaining partners wherein it shall be specified in the agreement that the outgoing partner will not carry on the business similar to that of the firm, subject to reasonable restrictions
AGREEMENT IN THE RESTRAINT OF LEGAL PROCEEDINGS: (Section 28)
An agreement purporting to oust the jurisdiction of the courts is illegal and void on grounds of public policy. Section 28 of the Act renders void two kinds of agreement, namely:
- An agreement by which a party is restricted absolutely from enforcing his legal rights arising under a contract by the usual legal proceedings in the ordinary tribunals.
- An agreement that limits the time within which the contract rights may be enforced.
By the way of an exception, it is provided that the above rule does not render illegal contracts by which two or more people agree that any dispute –
- Which may arise between them
- Which has already arisen –
Shall be referred to arbitration, and that only the amount awarded in such arbitration shall be recoverable in the dispute so referred.
AGREEMENTS WHICH ARE UNCERTAIN (AMBIGUOUS AGREEMENTS) (Section 29)
As per section 29 of the act, the meaning of any agreement which is uncertain or not capable of being made certain is void.
Illustration – A agrees to sell B a hundred tons of oil. There is nothing that shows which kind of oil was intended. The agreement is void for uncertainty.
RAMASAWAMI V. RAJGOPALA
A stipulation in a lease whereby a tenant agrees to pay whatever rent the landlord might fix, is void for uncertainty. If it were otherwise, the landlord might fix any amount he likes and the tenant might become liable to pay an unreasonable or exorbitant amount as rent.
AGREEMENTS BY THE WAY OF WAGER (Section 30)
Agreement by the way of wager are void therefore no suits shall be brought for recovering anything-
- Alleged to be won on any wager, or
- Entrusted to any person to abide by the result of any game or other uncertain event on which any wager is made
The wager is an agreement between two parties to the effect that if a given event is determined one way, the first of them shall pay a certain amount to the other and on the contrary event, the latter shall pay the amount to the first. Thus wagering is a contract to give money or money’s worth upon the determination or ascertainment or uncertain events. The intention of both parties to gamble is essential.
DIGGLE V. HIGGE
A and B deposited 200 euros each with a stakeholder to abide by the result of the walking match and the loser was to forfeit his 200 euros, it was held that it was purely wagering and thus was void.
AGREEMENTS WITHOUT CONSIDERATION
An agreement made without consideration is void unless –
- It is made with love affection
- It promises to compensate for voluntary services
- It is to pay a time-barred debt
Apart from these three cases, every agreement in order to be enforceable by law must be supported by consideration. In other words, the above three exceptions are circumstances in which an agreement made without consideration is valid in India.
CONTINGENT CONTRACT
A contingent contract is a contract to do or no to do something if some event collateral to such event does or does not happen.
Illustration- A contract to pay B Rs. 10,000 if C’s house is burnt.
As seen earlier, a contract constitutes a relation between the parties to it, and rights arise out of relations but it doesn’t follow that every contract creates a right that is immediately enforceable. The right created may be one which the parties agree, would be enforceable only on the happening of some future event as to which neither of the parties makes any promise and which is, therefore, collateral to the contract.
It is to be noted that CONTINGENT CONTRACT is quite different from an ABSOLUTE contract. When A agrees to sell B his house for Rs. 10 lakhs it is an absolute contract but when A agrees to sell B for the same price if there is rainfall in two days, this would be a contingent contract.
Author: Akshada Sarpande,
MIT School of law, student of FY BBA LLB
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